**EXHIBIT
      10.18**


**EXECUTIVE** **EMPLOYMENT
      AGREEMENT**








This
      EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is made effective this July
      31, 2006, by and between CAPITAL GOLD CORPORATION, a Delaware corporation
      (“Employer”), and ROGER A. NEWELL, a New York resident
      (“Executive”).





WHEREAS,
      Executive has dutifully served as an executive officer of Employer for the
      past
      six years, during which time Employee has received compensation below that
      generally received by an executive officer of a company in the Employer’s
      industry;





WHEREAS,
      the Employer has finally reached the stage of its development where it can
      commence mining operations;





WHEREAS,
      Executive agrees to be employed by Employer for the period and upon and subject
      to the terms herein provided; and





WHEREAS,
      Employer agrees to employ Executive for the period and upon and subject to
      the
      terms herein provided;





THEREFORE,
      in consideration of the foregoing and of the mutual promises, covenants and
      agreements contained herein, the legal sufficiency of which is hereby
      acknowledged, and intending to be legally bound, Employer and Executive agree:





1.  Employment .
      Upon
      and subject to the terms provided herein, Employer agrees to employ Executive,
      and Executive hereby agrees to be employed by Employer, as Employer’s Vice
      President of Development, or other substantially similar position.





2.  Term
      of Employment .
      Subject
      to the terms set forth in this Agreement, Employer agrees to employ Executive
      and Executive hereby agrees to be employed by Employer for a period (the
“Employment Period”) commencing from the date hereof until the third anniversary
      of the date hereof. The Employment Period shall automatically renew for
      successive one-year periods unless either party provides the other party with
      written notice of its intent not to renew at least thirty (30) days prior to
      the
      expiration of the then current Employment Period.





3.  Compensation .





(a)  *Base
      Salary* .
      As
      compensation for the services rendered pursuant to this Agreement, Employer
      agrees to pay Executive a base salary at an annual rate of not less than
      $120,000, payable in installments in accordance with Employer’s standard payroll
      practices, subject to such payroll and withholding deductions as are required
      by
      law or authorized by Executive. The amount of the base salary shall be reviewed
      periodically and may be increased at the sole discretion of Employer.





(b)  *Bonus* .
      Executive shall be eligible for any annual incentive bonus opportunity offered
      by Employer to employees at Executive’s level. In the event of any conflict
      between this Agreement and any incentive bonus plan adopted by Employer for
      its
      officers and employees, this Agreement shall control. The amount of this bonus,
      as well as the criteria necessary to earn a bonus, may be changed at any time
      by
      Employer and shall be within the sole discretion of Employer. All bonuses paid
      pursuant to this Agreement will be subject to applicable withholdings and
      deductions and will be paid no earlier than fifteen (15) days and no later
      than
      ninety (90) days after Employer’s fiscal year end for which the bonus is earned.
      If Executive’s employment terminates, voluntarily or involuntarily, prior to the
      last day of the fiscal year for which the bonus applies, Executive acknowledges
      that he is not entitled to any bonus not yet paid at the time of the termination
      because any such unpaid bonus will not be earned, vested, due, or owing.
      Executive hereby expressly forfeits and waives any such unpaid
      bonus.





(c)  *Vacation.*  For
      each
      full twelve (12) months of employment, Executive shall be entitled to receive
      four (4) weeks paid vacation. One (1) week of paid vacation may be carried
      forward from one calendar year to the next calendar year only (the “Carried
      Forward Vacation”). If applicable, Executive’s first week of vacation each
      calendar year shall be deemed the Carried Forward Vacation.





(d)  *Benefits* .
      Executive shall be entitled to participate in the employee benefits plans
      offered to all employees of Employer. Employer shall not be required to
      establish or continue any benefit plans or take any action to cause Executive
      to
      be eligible for any such benefits on a basis more favorable than that applicable
      to all its employees generally.





(e)  *Stock
      Options.* Executive
      will be eligible to participate in any stock option or other equity compensation
      plan adopted by Employer during the term of this Agreement and applicable to
      other employees at Executive’s level (the “Equity Plan”). The number of options,
      vesting schedule, exercise price, and all other terms and conditions of the
      stock options shall be set forth in an option agreement pursuant to the
      applicable plan and shall be commensurate with Executive’s position, as
      determined by the Committee of Employer’s Board of Directors charged with
      administering the Equity Plan, in its sole discretion. Employer may, consistent
      with its obligations under such a plan or plans, amend or discontinue any or
      all
      stock option plans at any time. Contingent upon Executive executing this
      Agreement and as additional consideration for Executive executing this Agreement
      and being bound by the obligations set forth herein, Employer will grant
      Executive on the date hereof, a two year option to purchase 250,000 shares
      of
      Employer’s common stock, which shall be subject to the terms and conditions set
      forth in this Section 3(e) and the Stock Option Agreement(s) attached hereto
      as Exhibit A .
      Executive understands and acknowledges that such o ption
      cannot be exercised unless and until the issuance of the option has been
      approved by the Company’s stockholders.





(f)  *Expense
      Reimbursement* .
      Employer shall reimburse Executive for all reasonable and documented travel,
      entertainment and other business expenses actually and properly incurred by
      him
      in relation to Employer’s business, as they are incurred. No such expense
      reimbursement shall be allowed with regard to such expenses that exceed $5,000
      unless such expenses have been pre-approved by Employer in
      writing.


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(g)  *Office
      and Duties* .
      Executive shall report to the President and Chief Executive Officer or such
      other supervisor as designated by the President and Chief Executive Officer
      of
      Employer. Executive shall perform such tasks commensurate with this position
      as
      may from time to time be assigned by Employer. Executive shall devote all
      business time, labor, skill, undivided attention and best ability to the
      performance of Executive’s duties hereunder in a manner which will faithfully
      and diligently further the business and interests of Employer. During the term
      of employment, Executive shall not directly or indirectly pursue any other
      business activity without the prior written consent of Executive’s supervisor,
      with the exception of passive personal investments not in breach of any other
      term or provision hereof. Executive agrees to travel to whatever extent is
      reasonably necessary in the conduct of Employer’s business, at Employer’s
      expense and pursuant to Employer’s standard policies and
      procedures.





4.  Termination
      of Employment .
      Notwithstanding any other provision of this Agreement, Executive’s employment
      may be terminated as follows:





(a)  *Expiration.* This
      Agreement may be terminated upon expiration of the term hereof. Following
      termination pursuant to this Section 4(a), Employer’s only obligation to
      Executive shall be to pay to Executive all accrued base salary, all accrued
      vacation time and any reasonable and necessary business expenses incurred by
      Executive in connection with his duties, all to the date of termination and
      payable in a lump sum, less applicable deductions and withholdings, as soon
      as
      administratively practicable following Executive’s termination.





(b)  *Termination
      for Cause.* This
      Agreement may be terminated by Employer for Cause. For purposes of this
      Agreement, “Cause” justifying the termination of this Agreement by Employer is
      defined as: (1) failure or refusal to perform the services required hereunder;
      (2) a material breach by Executive of any of the terms of this Agreement; or
      (3)
      Executive’s conviction of a crime that either results in imprisonment or
      involves embezzlement, dishonesty, or activities injurious to Employer or its
      reputation. Whether Cause exists under this Agreement shall be determined by
      the
      Employer in its reasonable discretion. Following termination pursuant to this
      Section 4(b), Employer’s only obligation to Executive shall be to pay to
      Executive all accrued base salary, all accrued vacation time and any reasonable
      and necessary business expenses incurred by Executive in connection with his
      duties, all to the date of termination and payable in a lump sum, less
      applicable deductions and withholdings, as soon as administratively practicable
      following Executive’s termination.





(c)  *Disability.* This
      Agreement may be terminated by Employer upon at least thirty (30) days’ written
      notice if Executive is prevented by illness, accident or other disability
      (mental or physical) from performing the essential functions of the position
      for
      one or more periods cumulatively totaling three (3) months during any
      consecutive twelve (12) month period. In the event this Agreement is terminated
      pursuant to this Section 4(c), Employer shall pay to Executive all accrued
      base salary, all accrued vacation time and any reasonable and necessary business
      expenses incurred by Executive in connection with his duties, all to the date
      of
      termination and payable in a lump sum, less applicable deductions and
      withholdings. In addition, Employer shall pay to Executive severance payments
      in
      an amount equal to one (1) month of Executive’s base salary, payable in a lump
      sum, less applicable deductions and withholdings, as soon as administratively
      practicable following Executive’s termination


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(“Disability
      Severance Payments”). Severance payments made by Employer to Executive pursuant
      to this Section 4(c) are conditioned on the Executive signing a
      Confidential Severance Agreement and Release substantially in the form attached
      hereto as Exhibit B .





(d)  *Death.* This
      Agreement shall be automatically terminated in the event of Executive’s death
      during the term of employment. In the event this Agreement terminates upon
      Executive’s death, Employer shall pay Executive’s estate or beneficiary, as
      applicable, all accrued base salary, all accrued vacation time and any
      reasonable and necessary business expenses incurred by Executive in connection
      with his duties, all to the date of termination and all payable in a lump sum,
      less applicable deductions and withholdings, as soon as administratively
      practicable following Executive’s termination.





(e)  *Without
      Cause.* This
      Agreement may be terminated by Employer without Cause by giving notice at least
      thirty (30) days prior to the effective termination date; provided  that Employer
      pays Executive each of the following:





(i)  Employer
      shall pay Executive severance payments (the “Cash Severance Payments”) in an
      amount equal to Executive’s base salary for three (3) months after the first
      anniversary of Executive’s original employment with Employer regardless of the
      date of this agreement, plus an additional one (1) month of base salary for
      each
      additional full year of employment (the “Cash Severance Payments”).
      Notwithstanding the foregoing, Cash Severance Payments shall not exceed 12
      months of base salary. Such Cash Severance Payments shall be paid in equal
      monthly installments to Executive beginning
      in the month following Executive’s termination .
      In
      addition, Employer shall pay to Executive all accrued base salary, all accrued
      vacation time and any reasonable and necessary business expenses incurred by
      Executive in connection with his duties, all to the date of termination and
      payable in a lump sum ,
      less
      applicable deductions and withholdings ,
      as soon
      as administratively practicable following Executive’s termination.





(ii)  If
      and
      when the Company adopts a health insurance plan for its employees and Executive
      is covered under such plan, provided that Executive timely elects continuation
      coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
      amended (“COBRA”), Employer shall pay, on Executive’s behalf, the portion of
      premiums of Executive’s group health insurance, including coverage for
      Executive’s eligible dependents, that Employer paid immediately prior to
      Executive’s separation of employment with Employer (“COBRA Payments”) for a
      period of twelve (12) months (“COBRA Period”). Employer will pay such COBRA
      Payments for Executive’s eligible dependents only for coverage for which those
      dependents were enrolled immediately prior to the date of Executive’s separation
      of employment. Executive will continue to be required to pay that portion of
      the
      premium of Executive’s health coverage, including coverage for Executive’s
      eligible dependents, that Executive was required to pay as an active employee
      immediately prior to the date of Executive’s separation of employment. For the
      balance of the period that Executive is entitled to coverage under COBRA after
      the COBRA Period, if any, Executive shall be entitled to maintain coverage
      for
      Executive and Executive’s eligible dependents at Executive’s sole
      expense.


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(iii)  The
      Cash
      Severance Payments and the COBRA Payments (if any) shall be paid so long as
      Executive is not in breach of any term of this Agreement, including, without
      limitation, Sections 5, 6, and 7 hereof. The Cash Severance Payments and COBRA
      Payments (if any) made by Employer to, or on behalf of, Executive pursuant
      to
      this Section 4(e) are conditioned on the Executive signing a Severance
      Agreement and Release substantially in the form attached hereto as Exhibit B .





(f)  *Material
      Breach.* This
      Agreement may be terminated by Executive for a material breach by Employer
      of
      any of the terms of this Agreement, upon thirty (30) days’ written notice
      specifying the breach, and failure of Employer to either (i) cure or diligently
      commence to cure the breach within the 30-day notice period, or (ii) dispute
      in
      good faith the existence of the material breach. Following termination pursuant
      to this Section 4(f), Employer shall pay to Executive Cash Severance
      Payments (as defined and calculated in section 4(e)(i)). Such severance payments
      shall be paid in equal monthly installments to Executive beginning
      in the month following Executive’s termination .
      Such
      severance payments shall be paid so long as Executive is not in breach of any
      term of this Agreement, including, without limitation, Sections 5, 6, and 7
      hereof. In addition, Employer shall pay to Executive all accrued base salary,
      all accrued vacation time and any reasonable and necessary business expenses
      incurred by Executive in connection with his duties, all to the date of
      termination and payable in a lump sum ,
      less
      applicable deductions and withholdings ,
      as soon
      as administratively practicable following Executive’s termination. Severance
      payments made by Employer to Executive pursuant to this Section 4(f) are
      conditioned on the Executive signing a Confidential Severance Agreement and
      Release substantially in the form attached hereto as Exhibit B .





(g)  *Resignation* .
      This
      Agreement may be terminated by Executive for any reason or no reason at all
      by
      giving notice to Employer of Executive’s resignation at least sixty (60) days
      prior to the effective resignation date. Following termination pursuant to
      this
      Section 4(g), Employer’s only obligation to Executive shall be to pay to
      Executive all accrued base salary, all accrued vacation time and any reasonable
      and necessary business expenses incurred by Executive in connection with his
      duties, all to the date of termination and payable in a lump sum, less
      applicable deductions and withholdings.





(h)  *Termination
      Upon a Change of Control* .
      In the
      event of a Termination Upon a Change of Control as defined in the Agreement
      Regarding Change In Control (“Change In Control Agreement”) attached hereto as Exhibit C ,
      Employer’s obligation to Executive shall be as set forth in the Change In
      Control Agreement.





5.  Proprietary
      Information .





(a)  Executive
      represents and warrants to Employer that (i) Executive is not subject to any
      limitation or agreement restricting employment by Employer or performance of
      Executive’s duties hereunder, and (ii) neither Executive nor any third party has
      any right or claim to Executive’s work produced on behalf of Employer or using
      the property, personnel, or facilities of Employer. Executive shall not
      misappropriate proprietary rights of Employer or any third
      party.


-5-


(b)  Executive
      further agrees not to make, use, disclose to any third party, or permit to
      be
      made, used, or disclosed, any records, plans, papers, articles, notes,
      memoranda, reports, lists, records, drawings, sketches, specifications, software
      programs, data, or other materials of any nature relating to any matter within
      the scope of the business of Employer or concerning any of its dealings or
      affairs (“Materials”), whether or not developed, in whole or in part, by
      Executive and whether or not embodying Confidential Information (defined below),
      otherwise than for the benefit of Employer. Executive shall not, after the
      termination of employment, use, disclose, or permit to be used or disclosed,
      any
      such Materials, it being agreed that all such Materials shall be and remain
      the
      sole and exclusive property of Employer. Immediately upon the termination of
      employment, Executive shall deliver all such Materials, and all copies thereof,
      to Employer, at its designated office.





6.  Non-Competition;
      Non-Solicitation; Anti-Raiding; Non-Disparagement . Without
      the prior written approval of the President or Chief Executive Officer of
      Employer, Executive shall not, directly or indirectly, during his employment
      and
      until the end of one (1) year after termination of employment (however such
      termination occurs, including, without limitation, termination pursuant to
      Section 4(a), 4(b), 4(c), 4(e), 4(f), or 4(g)):





(a)  Engage
      in
      a “Competing Business’’ in the “Territory”, as those terms are defined below,
      whether as a sole proprietor, partner, corporate officer, employee, director,
      shareholder, consultant, agent, independent contractor, trustee, or in any
      other
      manner by which Executive holds any beneficial interest in a Competing Business,
      derives any income from any interest in a Competing Business, or provides any
      service or assistance to a Competing Business. “Competing Business” shall mean
      any business that mines or produces minerals which is competitive with the
      business of Employer or any of its Affiliates (defined below), as conducted
      or
      under development at any time during the term of employment. “Affiliates” shall
      mean any entity controlled by or under common control with Employer or any
      joint
      venture, partnership or other similar entity to which Employer is a party.
      “Territory” shall mean anywhere within a 50 mile radius of Caborca in the state
      of Sonora, Mexico. The provisions of this Section 6 will not restrict
      Executive from owning less than five percent of the outstanding stock of a
      publicly-traded corporation engaged in a Competing Business;





(b)  Acquire,
      lease or otherwise obtain or control any beneficial, direct or indirect interest
      in mineral rights, or other rights or lands necessary to develop, any mineral
      property in which Employer or any of its Affiliates at the time of termination
      as a beneficial interest or is actively seeking to acquire, or that is within
      a
      distance of five (5) kilometers from any point on the outer perimeter of any
      such property in which Employer or any of its affiliates has a beneficial
      interest or that it is seeking to acquire;





(c)  Conduct
      any exploration or production activities or otherwise work on or in respect
      of
      any mineral property within a distance of five (5) kilometers from any point
      on
      the outer perimeter of any mineral property in which Employer or any of its
      affiliates then has a beneficial interest or is actively seeking to
      acquire;





(d)  (i) Contact
      or solicit, or direct or assist others to contact or solicit, for the purpose
      of
      promoting any person’s or entity’s attempt to compete with Employer or any of
      its Affiliates,


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in
      any
      business carried on by Employer or any of its Affiliates during the period
      in
      which Executive was an employee of Employer, any suppliers, independent
      contractors, vendors, or other business associates of Employer or any of its
      Affiliates that were existing or identified prospective suppliers, independent
      contractors, vendors, or business associates during such period, or
      (ii) otherwise interfere in any way in the relationships between Employer
      or any of its Affiliates and their suppliers, independent contractors, vendors,
      and business associates;





(e)  (i) Solicit,
      offer employment to, otherwise attempt to hire, or assist in the hiring of
      any
      employee or officer of Employer or any of its Affiliates; (ii) encourage,
      induce, assist or assist others in inducing any such person to terminate his
      or
      her employment with Employer or any of its Affiliates; or (iii) in any way
      interfere with the relationship between Employer or any of its Affiliates and
      their employees; or





(f)  Make
      any
      public statement or perform or do any other act prejudicial or injurious to
      the
      reputation or goodwill of Employer or any of its Affiliates or otherwise
      interfere with the business of Employer or any of its Affiliates.





7.  Confidentiality .





(a)  The
      term
“Confidential Information” shall include, but not be limited to, the whole or
      any portion or phase of (i) any confidential, or proprietary or trade secret,
      technical, business, marketing or financial information, whether pertaining
      to
      (1) Employer or its Affiliates, (2) its or their suppliers, or (3) any third
      party which Employer or its Affiliates is under an obligation to keep
      confidential including, but not limited to, methods, know-how, techniques,
      systems, processes, software programs, works of authorship, supplier lists,
      projects, plans, and proposals, and (ii) any software programs and programming
      prepared for Employer’s benefit whether or not developed, in whole or in part by
      Executive. For purposes of this Agreement, “Confidential Information” shall
      include, but shall not be limited to, strategies, analysis, concepts, ideas,
      or
      plans; operating techniques; demographic and trade area information; prospective
      site locations know-how; improvements; discoveries, developments; designs,
      techniques, procedures; methods; machinery, devices; drawings; specifications;
      forecasts; new products; research data, reports, or records; marketing or
      business development plans, strategies, analysis, concepts or ideas; contracts;
      general financial information about or proprietary to Employer, including,
      but
      not limited to, unpublished financial statements, budgets, projections,
      licenses, and costs; pricing; personnel information; and any and all other
      trade
      secrets, trade dress, or proprietary information, and all concepts or ideas
      in
      or reasonably related to Employer’s business. All such Confidential Information
      is extremely valuable and is intended to be kept secret to Employer; is the
      sole
      and exclusive property of Employer or its Affiliates; and, is subject to the
      restrictive covenants set forth herein. The term Confidential Information shall
      not include any information generally available to the public or publicly
      disclosed by Employer (other than by the act or omission of Executive),
      information disclosed to Executive by a third party under no duty of
      confidentiality to Employer or its Affiliates, or information required by law
      or
      court order to be disclosed by Executive.





(b)  Executive
      shall not, without Employer’s prior written approval, use, disclose, or reveal
      to any person or entity any of Employer’s Confidential Information, except as
      required in


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the
      ordinary course of performing duties hereunder. Executive shall not use or
      attempt to use any Confidential Information in any manner which has the
      possibility of injuring or causing loss, whether directly or indirectly, to
      Employer or any of its Affiliates.





(c)  In
      the
      event that Executive’s employment with Employer is terminated for any reason
      whatsoever, he shall return to Employer, promptly upon Employer’s written
      request therefore, any documents, photographs, tapes, discs, memory devices,
      and
      other property containing Confidential Information which were received by him
      during his employment, without retaining copies thereof.





8.  Acknowledgments .
      Executive acknowledges that the covenants contained in Sections 5, 6, and 7,
      including those related to duration, geographic scope, and the scope of
      prohibited conduct, are reasonable and necessary to protect the legitimate
      interests of Employer. He further acknowledges that the covenants contained
      in
      Sections 5, 6, and 7 are designed, intended, and necessary to protect, and
      are
      reasonably related to the protection of, Employer’s trade secrets, to which he
      will be exposed and with which he will be entrusted. Specifically, without
      limitation, Executive is entrusted with trade secrets regarding: the strategic
      planning initiatives; business development plans; budgets; financial
      information; management training; future business plans; and operational
      strategies and procedures.





9.  Forfeiture
      of Severance Payments .
      If
      Executive breaches Sections 5, 6, or 7 of this Agreement during
      the term that severance payments are made pursuant to Sections 4(c), 4(e),
      or
      4(f) of this Agreement, Executive shall pay back to Employer all severance
      payments received to date. Nothing
      contained in this Section 9 shall be construed as prohibiting Employer from
      pursuing any other remedies available to it in the event of the breach of
      Sections 5, 6, or 7, including the equitable remedies set forth in Section
      11.





10.  Non-exclusivity
      of Rights .
      Amounts
      that are vested benefits or that Executive is otherwise entitled to receive
      under any plan, policy or program of, or contract or agreement with Employer
      at
      or subsequent to termination of employment (however
      such termination occurs, including, without limitation, termination pursuant
      to
      Section 4(a), 4(b), 4(c), 4(e), 4(f), 4(g), or 4(h)) shall be payable in
      accordance with such plan, policy or program of, or any contract or agreement
      except as explicitly modified by this Agreement.





11.  Equitable
      Remedies .
      The
      services to be rendered by Executive and the Confidential Information entrusted
      to Executive as a result of his employment by Employer are of a unique and
      special character, and any breach of Sections 5, 6, or 7 will cause Employer
      immediate and irreparable injury and damage, for which monetary relief would
      be
      inadequate or difficult to quantify. Employer will be entitled to, in addition
      to all other remedies available to it, injunctive relief and specific
      performance to prevent a breach and to secure the enforcement of Sections 5,
      6,
      or 7. Executive acknowledges that injunctive relief may be granted immediately
      upon the commencement of any such action without notice to Executive and in
      addition may recover monetary damages. In the event a court requires posting
      of
      a bond, the parties agree to a maximum $5,000 bond. Executive further
      acknowledges that his duties under this Agreement shall survive termination
      of
      his employment, whether the termination is voluntary or involuntary, rightful
      or
      wrongful, and shall continue until Employer consents in writing to the release
      of


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Executive’s
      obligations under this Agreement. The parties further agree that the provisions
      of Sections 5, 6, and 7 are separate from and independent of the remainder
      of
      this Agreement and that these provisions are specifically enforceable by
      Employer notwithstanding any claim made by Executive against Employer.





12.  Attorney’s
      Fees .
      In the
      event Executive breaches, or threatens to breach, any provision of this
      Agreement, Executive acknowledges that he shall be solely and fully responsible
      for all fees and costs, including without limitation, all attorney’s fees and
      costs, incurred by Employer in enforcing this Agreement if Employer is the
      prevailing party in any litigation.





13.  Entire
      Agreement; Amendments .
      This
      Agreement (including all exhibits) constitute the entire understanding between
      the parties with respect to the subject matter herein and therein, and they
      supersede any prior or contemporaneous understandings or agreements. This
      Agreement may be amended, supplemented, or terminated only by a written
      instrument duly executed by each of the parties.





14.  Headings .
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      affect its interpretation. References to Sections are to Sections
      hereof.





15.  Gender;
      Number .
      Words
      of gender may be read as masculine, feminine, or neuter, as required by context.
      Words of number may be read as singular or plural, as required by
      context.





16.  Severability .
      The
      covenants in this Agreement shall be construed as independent of one another,
      and as obligations distinct from one another and any other contract between
      Executive and Employer. If any provision of this Agreement is held illegal,
      invalid, or unenforceable, such illegality, invalidity, or unenforceability
      shall not affect any other provisions hereof. It is the intention of the parties
      that in the event any provision is held illegal, invalid, or unenforceable,
      that
      such provision be limited so as to effect the intent of the parties to the
      fullest extent permitted by applicable law. Any claim by Executive against
      Employer shall not constitute a defense to enforcement by Employer of this
      Agreement.





17.  Survival .
      The
      provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 16, 17, 18, 19, 20,
      21
      and 22 shall survive the termination of this Agreement.





18.  Notices .
      All
      notices, demands, waivers, consents, approvals, or other communications required
      hereunder shall be in writing and shall be deemed to have been given if
      delivered personally, if sent by facsimile with confirmation of receipt, if
      sent
      by certified or registered mail, postage prepaid, return receipt requested,
      or
      if sent by same day or overnight courier service to the following
      addresses:





If
      to
      Employer, to:





Capital
      Gold Corporation


76
      Beaver
      Street, 26 th Floor


-9-


New
      York,
      New York 10005


Attention:
      Gifford A. Dieterle


Telephone:
      (212) 344-2785


Facsimile:
      (212) 344-4537





If
      to
      Executive, to:





Roger
      A.
      Newell


1781
      S.
      Larkspur Drive


Golden,
      CO 80401


Telephone:
      (303) 526-5100


Facsimile:
      (303) 526-5889





Notice
      of
      any change in any such address shall also be given in the manner set forth
      above. Whenever the giving of notice is required, the giving of such notice
      may
      be waived by the party entitled to receive such notice.





19.  Waiver .
      The
      failure of any party to insist upon strict performance of any of the terms
      or
      conditions of this Agreement shall not constitute a waiver of any of such
      party’s rights hereunder.





20.  Assignment .
      Other
      than as provided below, neither party may assign any rights or delegate any
      of
      obligations hereunder without the prior written consent of the other party,
      and
      such purported assignment or delegation shall be void; provided that Employer
      may assign the Agreement to any entity that purchases the stock or assets of,
      or
      merges with, Employer or any Affiliate. This Agreement binds, inures to the
      benefit of, and is enforceable by the successors and permitted assigns of the
      parties and does not confer any rights on any other persons or
      entities.





21.  Governing
      Law .
      This
      Agreement shall be construed and enforced in accordance with New York law except
      for any New York conflict-of-law principle that might require the application
      of
      the laws of another jurisdiction.





22.  Submission
      to Jurisdiction: Service: Waivers .
      With
      respect to any claim arising out of this Agreement, each party hereto (a)
      irrevocably submits, for itself and its property, to the jurisdiction of the
      state court located in the City and County of New York, New York, the federal
      court located in New York, New York, and appellate courts therefrom, (b) agrees
      that the venue for any suit, action or proceeding arising out of or relating
      to
      this Agreement shall be exclusive to and limited to such courts, and (c)
      irrevocably waives any objection it may have at any time to the laying of venue
      of any suit, action or proceeding arising out of or relating to this Agreement
      brought in any such court, irrevocably waives any claim that any such suit,
      action or proceeding brought in any such court has been brought in an
      inconvenient forum and further irrevocably waives the right to object, with
      respect to such claim, suit, action or proceeding brought in any such court
      that
      such court does not have jurisdiction over it. Each party irrevocably consents
      to the service of process in any suit, action or proceeding in any of the
      aforesaid courts by the


-10-


mailing
      of copies of process to the other party or parties hereto, by certified or
      registered mail at the address specified in Section 18.





[SIGNATURE
      PAGE FOLLOWS]


-11-





IN
      WITNESS WHEREOF, the parties have executed this Agreement on the date first
      above written.





EMPLOYER
      :





CAPITAL
      GOLD CORPORATION








By: s/
      Gifford A. Dieterle


Gifford
      A
      Dieterle, President







EXECUTIVE:





s/Roger
      A. Newell


Roger
      A.
      Newell




-12-




**EXHIBIT
      A**





**STOCK
      OPTION AGREEMENT**





THE
      SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
      COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY,
      NOR
      HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF
      THIS
      OFFERING OR THE ACCURACY OR ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO
      THE
      CONTRARY IS A CRIMINAL OFFENSE.








**CAPITAL
      GOLD CORPORATION**


**76
      Beaver Street**


**26th
      Floor**


**New
      York, NY 10005-3402**




OPTION








No.
      Shares: 250,000


Option
      No. 2006-


Expiration
      Date: July 31, 2008








This
      Is
      To Certify That, FOR VALUE RECEIVED, ROGER A. NEWELL, residing at 1781 S.
      Larkspur Drive, Golden, CO 80401 ("Holder") is entitled to purchase, subject
      to
      the provisions of this Option from CAPITAL GOLD CORPORATION, a Delaware
      corporation ("Company") at any time from July 31, 2006 (subject to prior
      stockholder and TSX approval as required in section (a) below) and not later
      than 5:00 P.M., New York Time on July 31, 2008 at a purchase price of $0.32
      per
      share (market price on July 31, 2006), Two Hundred Fifty Thousand (250,000)
      restricted shares of common stock $.0001 par value, of the Company ("Common
      Stock"). The number of shares of Common Stock to be received upon the exercise
      of this Option and the price to be paid for a share of Common Stock may be
      adjusted from time to time as hereinafter set forth.





(a)
      EXERCISE OF OPTION. Except as described below, this Option may be exercised
      in
      whole or in part at any time from July 31, 2006 until the Expiration date set
      forth above by presentation and surrender thereof to the Company or at the
      office of its stock transfer agent, if any, with the Exercise Form annexed
      hereto duly executed and accompanied by payment of the Exercise Price for the
      number of shares specified in such form, together with all federal and state
      taxes applicable upon such exercise. If this Option should be exercised in
      part
      only, the Company shall, upon surrender of this Option for cancellation, execute
      and deliver a new Option evidencing the right of the holder to purchase the
      balance of the shares purchasable hereunder. Upon receipt by the Company of
      this
      Option and a properly executed Exercise Form at the office or agency of the
      Company, in proper form for exercise, the Holder shall be deemed to be the
      holder of record of the shares of Common Stock issuable upon such exercise,
      notwithstanding that


A-1


the
      stock
      transfer books of the Company shall then be closed or that certificates
      representing such shares of Common Stock shall not then be actually delivered
      to
      the Holder.





Notwithstanding
      the foregoing, this Option cannot be exercised unless and until the issuance
      of
      the Option has been approved by the TSX and the Company’s stockholders.





(b)  RESTRICTION
      ON RESALE.  The
      Holder represents that the shares to be acquired by Holder upon the exercise
      of
      this Option will be purchased for investment and not with a view to, or for
      resale in connection with, any distribution of stock within the meaning of
      the
      Securities Act of 1933, as amended (the "Act"). By such representation, the
      Holder means that he will acquire the shares for his own account for investment
      and that no one else will have any beneficial ownership in such shares nor
      will
      such shares be subject to any pledge or lien. Further, the Holder understands
      that the shares will not be registered under the Act by reason of a specific
      exemption provided therein. Because the shares are unregistered under the Act,
      they must be held indefinitely unless subsequently registered under the Act
      or
      an exemption from such registration is available. The Holder further understands
      that in the event that there is a continued market for the Company's Common
      Stock, any routine sales of the shares made in reliance upon Rule 144 can be
      made only in limited amounts in accordance with the terms and conditions of
      that
      rule, and in the event that rule is not applicable or is unavailable for any
      reason, Registration under the Act or compliance with exemption will be
      required. The Holder understands that the Company is under no obligation to
      register under the Act the Common Stock that Holder may acquire pursuant to
      this
      Option, nor to effect compliance with any exemption from
      registration.





The
      Holder agrees that each certificate representing any or all of the shares shall
      bear on its face a legend in substantially the following form:





"These
      securities have not been registered under the Securities Act of 1933, as
      amended. They may not be sold or transferred in the absence of an effective
      Registration Statement under that Act without an opinion of counsel satisfactory
      to the Company that such Registration is not required."





“By
      virtue of the legend above, the securities represented by this certificate
      may
      not be traded through the facilities of Canadian stock exchanges and this
      certificate will not constitute "good delivery" in settlement of transactions
      on
      Canadian stock exchanges”





The
      Holder further consents that the Company will place a stop order on the
      certificates evidencing the shares, restricting the transfer of the shares,
      except in compliance with the Act.





(c)
      RESERVATION OF SHARES. The Company hereby agrees that at all times there shall
      be reserved for issuance and/or delivery upon exercise of this Option such
      number of shares of its Common Stock as shall be required for issuance or
      delivery upon exercise of this Option.




(d)  FRACTIONAL
      SHARES. No fractional shares or scrip representing fractional shares shall
      be
      issued upon the exercise of this Option. With respect to any fraction of
      a


A-2


share
      called for upon any exercise hereof, the Company shall round up or down to
      the
      nearest whole share.





(e)
      RIGHTS OF THE HOLDER. The Holder shall not by virtue hereof, be entitled to
      any
      rights of a shareholder in the Company, either at law or equity and the rights
      of the Holder are limited to those expressed in this Option and are not
      enforceable against the Company, except to the extent set forth
      herein.





(f)
      ADJUSTMENTS. Subject and pursuant to the provisions of this Section (f), the
      Option Price and number of Common Shares subject to this Option shall be subject
      to adjustment from time to time as set forth hereinafter.





(A)  If
      the
      Company shall, at any time, subdivide its outstanding Common Shares by
      recapitalization, reclassification, split up thereof, or other such issuance
      without additional consideration, the appropriate Option Price immediately
      prior
      to such subdivision shall be proportionately decreased, and if the Company
      shall
      at any time combine the outstanding Common Shares by recapitalization,
      reclassification or combination thereof, the Option Price immediately prior
      to
      such combination shall be proportionately increased. Any such adjustment to
      the
      Option Price or the corresponding adjustment to the Option Price shall become
      effective at the close of business on the record date for such subdivision
      or
      combination.





(B)  In
      the
      event that prior to the expiration date of this Option the Company adopts a
      resolution to merge, consolidate, or sell percentages in all of its assets,
      each
      Option holder upon the exercise of his Option will be entitled to receive the
      same treatment as a holder of any other share of Common Stock. In the event
      the
      Company adopts a resolution for the liquidation, dissolution, or winding up
      of
      the Company's business, the Company will give written notice of such adoption
      of
      a resolution to the Holder of this Option. Thereupon all liquidation and
      dissolution rights under this Option will terminate at the end of thirty (30)
      days from the date of the notice to the extent not exercised within those thirty
      (30) days.





(C)  If
      any
      capital reorganization or reclassification of the capital stock of the Company
      or consolidation or merger of the Company with another corporation, shall be
      effected in such a way that holders of Common Stock shall be entitled to receive
      stock, securities, cash or assets with respect to or in exchange for Common
      Stock, then, as a condition of such reorganization, reclassification,
      consolidation, merger or sale, the Holder shall have the right thereafter and
      until the expiration date to exercise such Option for the kind and amount of
      stock, securities, cash or assets receivable upon such reorganization,
      reclassification, consolidation, merger or sale by a holder of the number of
      shares of Common Stock for the purchase of which such Option might have been
      exercised immediately prior to such reorganization, reclassification,
      consolidation, merger or sale, subject to adjustments which shall be as nearly
      equivalent as may be practicable to the adjustments provided for in this Section
      (f).





(D)  In
      case
      at any time the Company shall declare a dividend or make any other distribution
      upon any stock of the Company payable in Common Stock, then such Common Stock
      issuable in payment of such dividend or distribution shall be deemed to have
      been issued or sold without consideration.


A-3




(E)
      Upon
      any adjustment of the appropriate respective Option Price as hereinabove
      provided, the number of Common Shares issuable upon exercise of each class
      of
      Option shall be changed to the number of shares determined by dividing (i)
      the
      aggregate Option Price payable for the purchase of all shares issuable upon
      exercise of that class of Option immediately prior to such adjustment by (ii)
      the appropriate Option Price per share in effect immediately after such
      adjustment.





(F)  No
      adjustment in the Option Price shall be required under Section (f) hereof unless
      such adjustment would require an increase or decrease in such price of at least
      25% provided, however, that any adjustments which by reason of the foregoing
      are
      not required at the time to be made shall be carried forward and taken into
      account and included in determining the amount of any subsequent adjustment,
      and
      provided further, however, that in case the Company shall at any time subdivide
      or combine the outstanding Common Shares as a dividend, said amount of 25%
      per
      share shall forthwith be proportionately increased in the case of a combination
      or decreased in the case of a subdivision or stock dividend so as to
      appropriately reflect the same.





(G)  On
      the
      effective date of any new Option Price the number of shares as to which any
      Option may be exercised shall be increased or decreased so that the total sum
      payable to the Company on the exercise of such Option shall remain
      constant.





(H)  The
      form
      of Option need not be changed because of any change pursuant to this Article,
      and Options issued after such change may state the Option Price and the same
      number of shares as is stated in the Options initially issued pursuant to this
      Option. However, the Company may at any time in its sole discretion (which
      shall
      be conclusive) make any change in the form of Option that the Company may deem
      appropriate and that does not affect the substance thereof, and any Option
      thereafter issued or countersigned, whether in exchange or substitution for
      an
      outstanding Option or otherwise, may be in the form as so changed.





(g)
      ISSUANCE OF STOCK CERTIFICATES UPON EXERCISE OF OPTIONS. Upon the surrender
      of
      the Option and payment of the Option price as aforesaid, the Company shall
      issue
      and cause to be delivered with all reasonable dispatch to or upon the written
      order of the Holder, a certificate or certificates (bearing the restrictive
      legend set forth in Section (b) herein) for the number of full Common Shares
      so
      purchased upon the exercise of such Option. Such certificate or certificates
      shall be deemed to have been issued and the Holder shall be deemed to have
      become a holder of record of such shares as of the date of the surrender of
      the
      Option and payment of the Option Price as aforesaid provided, that if, at the
      date of surrender of the Option and payment of such Option Price, the transfer
      books for the Common Shares or other class of stock purchasable upon the
      exercise of the Option shall be closed, the certificates for the shares in
      respect of which the Option is then exercised shall be issuable as of the date
      on which such books shall be opened, and until such date the Company shall
      be
      under no duty to deliver any certificates for such shares; provided further,
      however, that the transfer books aforesaid, unless otherwise required by law
      or
      by applicable rule of any national securities exchange, shall not be closed
      at
      any one time for a period longer than 20 days. The rights of purchase
      represented by the Option shall be exercisable at the election of the Holder,
      either as an entirety or, from time to time, for part only


A-4


of
      the
      shares specified therein; and in the event that any Option is exercised in
      respect of less than all of the shares specified therein at any time prior
      to
      the date of expiration of the Option, a new Option or Options will be issued
      to
      such Holder for the remaining number of shares specified in the Option so
      surrendered.





(h)
      NOTICES TO OPTIONHOLDER.





(A)  Upon
      any
      adjustment of the Option Price and the number of shares issuable on exercise
      of
      the Option, then and in each such case the Company shall give written notice
      thereof to the Holder, which notice shall state the Option Price resulting
      from
      such adjustment and the increase or decrease, if any, in the number of shares
      purchasable at such price upon the exercise of the Option, setting forth in
      reasonable detail the method of calculation and the facts upon which such
      calculation is based.





(B)
      In
      case at any time





(a)
      the
      Company shall pay any dividends payable in stock upon its Common Stock or make
      any distribution (other than regular cash dividends) to the holders of its
      Common Stock,





(b)
      the
      Company shall offer for subscription pro rata to the holders of its Common
      Stock
      any additional shares of stock of any class or other rights,





(c)
      there
      shall be any capital reorganization or reclassification of the capital stock
      of
      the Company or consolidation or merger of the Company with, or sale of all
      or
      substantially all of its assets to, another corporation, or





(d)
      there
      shall be a voluntary or involuntary dissolution, liquidation or winding up
      of
      the Company, then in any one or more of such cases, the Company shall give
      written notice in the manner set forth in Section (h) on the date on which
      (i)
      the books of the Company shall close or a record date shall be taken for such
      dividend, distribution or subscription rights or (ii) such reorganization,
      liquidation or winding up shall take place as the case may be. Such notice
      shall
      also specify the date as of which the holders of Common Stock of record shall
      participate in such dividend, distribution, or subscription rights or shall
      be
      entitled to exchange their Common Stock for securities or other property
      deliverable upon such reorganization, reclassification, consolidation, merger,
      sale, dissolution, liquidation, or winding up, as the case may be. Such notice
      shall be given and published at least 30 days prior to the action in question
      and not less than 30 days prior to the record date or the date on which the
      Company's transfer books are closed in respect thereof. Failure to give such
      notice, or any defect therein, shall not affect the legality or validity of
      any
      of the matters set forth in this Section (h) inclusive.





(i)
      APPLICABLE LAW. This Option shall be governed by, and construed in accordance
      with, the laws of the State of New York.





A-5




**CAPITAL
      GOLD CORPORATION**







ATTEST:


By: 
      ____________________________


Gifford
      A. Dieterle, President







Jeffrey
      W. Pritchard, Assistant Secretary




A-6




EXERCISE
      FORM





Dated
      ____________, 20__





The
      holder hereby irrevocably elects to exercise the within Option to the extent
      of
      purchasing __________ shares
      of
      Common Stock and hereby makes payment of $___________ in payment of the actual
      Exercise Price thereof.







Name
      _____________________________________ Title
      ________________________________











Signature:
      _______________________________________




A-7




**EXHIBIT B**





**FORM
      OF**


**SEVERANCE
      AGREEMENT AND RELEASE**





This
      SEVERANCE AGREEMENT AND RELEASE (this “Agreement”) is made between (i)
      _______________ (“Employee”)
      and (ii) CAPITAL GOLD CORPORATION, a Delaware corporation (the “Company”).
      Employee and the Company are referred to collectively as the “Parties” and
      individually as a “Party.”





RECITALS





WHEREAS,
      Employee’s employment with the Company ended effective __________ ;





WHEREAS,
      the Parties wish to resolve fully and finally any potential disputes regarding
      Employee’s employment with the Company and any other potential disputes between
      the Parties; and





WHEREAS,
      in order to accomplish this end, the Parties are willing to enter into this
      Agreement.





NOW
      THEREFORE, in consideration of the mutual promises and undertakings contained
      herein, the sufficiency of which is acknowledged by the Parties, the Parties
      to
      this Agreement agree as follows:





TERMS





1.  Separation
      and Effective Date .
      Employee’s employment with the Company ended on _________________________. This
      Agreement shall become effective (the “Effective Date”) on the eighth day after
      Employee’s execution of this Agreement, provided that employee has not revoked
      Employee’s acceptance pursuant to Section 6(g) below.





2.  Severance
      Payments .





(a)  After
      the
      expiration of the Effective Date, and on the express condition that Employee
      has
      not revoked this Agreement, the Company will pay Employee severance payments
      in
      an amount and in the manner set forth in Section 4 of Employee’s Employment
      Agreement dated July 31, 2006 (the “Employment Agreement”), less applicable
      withholdings and deductions (“Severance Payments”). The Severance Payments will
      be mailed to Employee or direct deposited to an account designated by
      Employee.





(b)  Reporting
      of and withholding on any Severance Payment under this Section 2 for tax
      purposes shall be at the discretion of the Company in conformance with
      applicable tax laws. If a claim is made against the Company for any additional
      tax or withholding in connection with or arising out of the Severance Payments
      pursuant to Section 2(a), Employee shall pay any such claim within thirty (30)
      days of being notified by the Company and agrees to indemnify
      the


B-1


Company
      and hold it harmless against such claims, including but not limited to any
      taxes, attorneys’ fees, penalties or interest, which are or become due from the
      Company.





3.  General
      Release .





(a)  Employee,
      for himself and for his affiliates, successors, heirs, subrogees, assigns,
      principals, agents, partners, employees, associates, attorneys, and
      representatives, voluntarily, knowingly and intentionally releases and
      discharges the Company and its predecessors, successors, parents, subsidiaries,
      affiliates, and assigns and each of their respective officers, directors,
      principals, shareholders, agents, attorneys, board members, and employees from
      any and all claims, actions, liabilities, demands, rights, damages, costs,
      expenses, and attorneys’ fees (including but not limited to any claim of
      entitlement for attorneys’ fees under any contract, statute, or rule of law
      allowing a prevailing party or plaintiff to recover attorneys’ fees), of every
      kind and description from the beginning of time through the Effective Date
      (the
“Released Claims”).





(b)  The
      Released Claims include but are not be limited to those which arise out of,
      relate to, or are based upon: (i) Employee’s employment with the Company or the
      termination thereof; (ii) statements, acts, or omissions by the Parties
      whether in their individual or representative capacities; (iii) express or
      implied agreements between the Parties (except as provided herein) and claims
      under any severance plan; (iv) any stock or stock option grant, agreement,
      or plan; (v) all federal, state, and municipal statutes, ordinances, and
      regulations, including, but not limited to, claims of discrimination based
      on
      race, age, sex, disability, whistleblower status, public policy, or any other
      characteristic of Employee under the Age Discrimination in Employment Act,
      the
      Older Workers Benefit Protection Act, the Americans with Disabilities Act,
      the
      Fair Labor Standards Act, the Equal Pay Act, Title VII of the Civil Rights
      Act
      of 1964 (as amended), the Employee Retirement Income Security of 1974, the
      Rehabilitation Act of 1973, the Worker Adjustment and Retraining Notification
      Act, or any other federal, state, or municipal law prohibiting discrimination
      or
      termination for any reason; (vi) state and federal common law; and
      (vii) any claim which was or could have been raised by Employee, including
      any claim that this Agreement was fraudulently induced.





4.  Unknown
      Facts .
      This
      Agreement includes claims of every nature and kind, known or unknown, suspected
      or unsuspected. Employee hereby acknowledges that he may hereafter discover
      facts different from, or in addition to, those which he now knows or believes
      to
      be true with respect to this Agreement, and he agrees that this Agreement and
      the release contained herein shall be and remain effective in all respects,
      notwithstanding such different or additional facts or the discovery
      thereof.





5.  No
      Admission of Liability .
      The
      Parties agree that nothing contained herein, and no action taken by any Party
      hereto with regard to this Agreement, shall be construed as an admission by
      any
      Party of liability or of any fact that might give rise to liability for any
      purpose whatsoever.


B-2




6.  Warranties .
      Employee warrants and represents as follows:





a.  He
      has
      read this Agreement, and he agrees to the conditions and obligations set forth
      in it.





b.  He
      voluntarily executes this Agreement after having been advised to consult with
      legal counsel and after having had opportunity to consult with legal counsel
      and
      without being pressured or influenced by any statement or representation or
      omission of any person acting on behalf of the Company including, without
      limitation, the officers, directors, board members, committee members,
      employees, agents, and attorneys for the Company.





c.  He
      has no
      knowledge of the existence of any lawsuit, charge, or proceeding against the
      Company or any of its officers, directors, board members, committee members,
      employees, or agents arising out of or otherwise connected with any of the
      matters herein released.





d.  Prior
      to
      Employee’s execution of this Agreement, he has not used or disclosed any
      information in a manner that would be a violation of Sections 7 or 8 set
      forth below if such use or disclosure were to be made after the execution of
      this Agreement.





e.  He
      has
      full and complete legal capacity to enter into this Agreement.





f.  He
      has
      had at least twenty-one days in which to consider the terms of this Agreement.
      In the event that Employee executes this Agreement in less time, it is with
      the
      full understanding that he had the full twenty-one days if he so desired and
      that he was not pressured by the Company or any of its representatives or agents
      to take less time to consider the Agreement. In such event, Employee expressly
      intends such execution to be a waiver of any right he had to review the
      Agreement for a full twenty-one days.





g.  He
      understands that this Agreement waives any claim he may have under the Age
      Discrimination in Employment Act. Employee may revoke this Agreement for up
      to
      seven days following its execution, and this Agreement shall not become
      enforceable and effective until seven days after such execution. If Employee
      chooses to revoke this Agreement, he must provide written notice to the
      President and Chief Executive Officer of the Company by hand delivery and by
      facsimile within seven calendar days of Employee’s execution of this Agreement.
      If Employee does not revoke within the seven-day period, the right to revoke
      is
      lost.





h.  He
      admits, acknowledges, and agrees that he is not otherwise entitled to the
      Severance Payments set forth in Section 2, and that such Severance Payments
      are good and sufficient consideration for this Agreement. He admits,
      acknowledges, and agrees that he has been fully and finally paid or provided
      all
      wages, compensation, vacation, expenses (including, but not limited to,
      relocation and travel expenses), bonuses, stock, stock options, or other
      benefits from the Company which are or could be due to Employee from the
      Company.





i.  He
      has
      not taken any action or made any statement adverse to the Company’s interests
      prior to signing this Agreement.


B-3





7.  Confidential
      Information .
      Except
      as herein provided, all discussions regarding this Agreement, including, but
      not
      limited to, the amount of consideration, offers, counteroffers or other terms
      or
      conditions of the negotiations, shall be kept confidential by Employee from
      all
      persons and entities other than the Parties to this Agreement. Employee may
      disclose the amount received in consideration of the Agreement only if necessary
      (i) for the limited purpose of making disclosures required by law to agents
      of the local, state, or federal governments; (ii) for the purpose of
      enforcing any term of this Agreement; or (iii) in response to compulsory
      process, and only then after giving the Company ten days advance notice of
      the
      compulsory process and affording the Company the opportunity to obtain any
      necessary or appropriate protective orders. Otherwise, in response to inquiries
      about this matter, Employee shall state, “My employment with the Company has
      ended,” and nothing more. Employee hereby expressly acknowledges that any breach
      of this Section 7 shall result in a claim for injunctive relief, damages and/or
      criminal sanctions and penalties against Employee by the Company, and possibly
      others.





8.  Non-Disparagement .
      Employee agrees not to make to any person any statement that disparages the
      Company or reflects negatively on the Company, including, but not limited to,
      statements regarding the Company’s financial condition, employment practices, or
      its officers, directors, board members, employees, affiliates, attorneys,
      customers, or vendors.





9.  Return
      of Company Property and Information .
      Employee represents and warrants that, prior to his execution of this Agreement,
      he will return to the Company any and all property, documents, and files,
      including any documents (in any recorded media, such as papers, computer disks,
      copies, photographs, maps, transparencies, and microfiche) that relate in any
      way to the Company or the Company’s business whether or not developed, produced,
      or conceived, in whole or in part, by Employee during the term of his employment
      with the Company. Employee agrees that, to the extent that he possesses any
      files, data, or information relating in any way to the Company or the Company’s
      business on any personal computer, he will delete those files, data, or
      information (and will retain no copies in any form). Employee also will return
      any Company tools, equipment, calling cards, credit cards, access cards or
      keys,
      any keys to any filing cabinets, vehicles, vehicle keys, and all other Company
      property in any form prior to the date he executes this Agreement. Employee
      hereby expressly acknowledges that the foregoing steps are necessary to protect
      the Company’s proprietary interests in its trade secrets, confidential
      information, and copyrights, and that Employee is not entitled to use, disclose,
      or otherwise benefit from the Company’s proprietary interests.  Employee
      understands that any breach of this Section 9 will also constitute a
      misappropriation of the Company’s proprietary rights, and may constitute a theft
      of the Company’s trade secrets under applicable local, state, and federal
      statutes, and will result in a claim for injunctive relief, damages, and/or
      criminal sanctions and penalties against Employee by the Company, and possibly
      others.





10.  Severability .
      If any
      provision of this Agreement is held illegal, invalid, or unenforceable, such
      holding shall not affect any other provisions hereof. In the event any provision
      is held illegal, invalid, or unenforceable, such provision shall be limited
      so
      as to effect the intent of the Parties to the fullest extent permitted by
      applicable law. Any claim by Employee against the Company shall not constitute
      a
      defense to enforcement by the Company.


B-4


11.  Assignment .
      The
      Company may assign its rights under this Agreement. Employee cannot assign
      his
      rights under this Agreement without the written consent of the
      Company.





12.  Enforcement .
      The
      releases contained herein do not release any claims for enforcement of the
      terms, conditions, or warranties contained in this Agreement. The Parties shall
      be free to pursue any remedies available to them to enforce this
      Agreement.





13.  Survival
      of Employment Agreement Terms and Agreement Regarding Change In
      Control .
      This
      Agreement in no way affects or alters the surviving provisions set forth in
      Section 17 of the Employment Agreement, or the Agreement Regarding Change In
      Control dated July 31, 2006 between the Employer and the Employee (“CC
      Agreement”). Those provisions and the CC Agreement are hereby incorporated by
      reference and serve as part of the consideration for this Agreement. Employee
      agrees to continue to abide by the surviving provisions set forth in Section
      17
      of the Employment Agreement to the extent that those provisions impose any
      obligation upon Employee.





14.  Entire
      Agreement .
      This
      Agreement, the surviving provisions set forth in Section 17 of the Employment
      Agreement and the CC Agreement constitute the entire agreement between the
      Parties with respect to the subject matter contained herein. This Agreement
      supersedes any and all prior oral or written promises or agreements between
      the
      Parties, except as otherwise provided herein. Employee acknowledges that he
      has
      not relied on any promise, representation, or statement other than those set
      forth in this Agreement. This Agreement cannot be modified except in writing
      signed by all Parties.





15.  Venue
      and Applicable Law .
      This
      Agreement shall be interpreted and construed in accordance with the laws of
      the
      State of New York, without regard to its conflicts of law provisions. Venue
      and
      jurisdiction shall be in the federal or state courts in New York, New
      York.





[SIGNATURE
      PAGE FOLLOWS]


B-5





IN
      WITNESS WHEREOF, the Parties have executed this Agreement on the dates written
      below.





EMPLOYEE:





_____________________________           
      __________________________


Name Date





THE
      COMPANY:





CAPITAL
      GOLD CORPORATION











By:_____________________________________       _____________________________


Name: Date


Title:




B-6




**EXHIBIT
      C**





**AGREEMENT
      REGARDING**


**CHANGE
      IN CONTROL**





THIS
      AGREEMENT (“Agreement”), is made and entered into as of the 31 st day of
      July, 2006 (the “Effective Date”) by and between Capital Gold Corporation (the
“Company”) and Roger A. Newell (the “Executive”)





WITNESSETH
      THAT:





WHEREAS,
      the Company considers it essential to the best interests of its stockholders
      to
      foster the continuous engagement of key management personnel, and the Board
      of
      Directors of the Company (the “Board”) recognizes that, as is the case with many
      publicly held corporations, a change in control might occur and that such
      possibility, and the uncertainty and questions which it may raise among
      management, may result in the departure or distraction of management personnel
      to the detriment of the Company and its stockholders; and





WHEREAS,
      the Board has determined that appropriate steps should be taken to reinforce
      and
      encourage the continued attention and dedication of members of the Company’s
      management, including the Executive, to their engagement without distraction
      in
      the face of potentially disturbing circumstances arising from the possibility
      of
      a change in control of the Company;





NOW,
      THEREFORE, to induce the Executive to remain engaged by the Company and in
      consideration of the premises and mutual covenants set forth herein, IT IS
      HEREBY AGREED by and between the parties as follows:





1.  AGREEMENT
      TERM. The initial “Agreement Term” shall begin on the Effective Date and shall
      continue through December 31, 2009. As of December 31, 2009, and as of each
      December 31 thereafter, the Agreement Term shall extend automatically to the
      third anniversary thereof unless the Company gives notice to the Executive
      prior
      to the date of such extension that the Agreement Term will not be extended.
      Notwithstanding the foregoing, if a Change in Control (as defined in Section
      7
      below), occurs during the Agreement Term, the Agreement Term shall continue
      through and terminate on the second anniversary of the date on which the Change
      in Control occurs.





2.  ENTITLEMENT
      TO CHANGE IN CONTROL BENEFITS. The Executive shall be entitled to the Change
      in
      Control Benefits described in Section 3 hereof if the Executive’s engagement by
      the Company is terminated during the Agreement Term but after a Change in
      Control (i) by the Company for any reason other than Permanent Disability or
      Cause, (ii) by the Executive for Good Reason or (iii) by the Executive for
      any
      reason during the 30-day period commencing on the first date which is six months
      after the date of the Change in Control. For purposes of this
      Agreement:




C-1


(a)  A
      termination of the Executive’s engagement shall be treated as a termination by
      reason of “Permanent Disability” only if, due to a mental or physical
      disability, the Executive is absent from the performance of services for the
      Company for a period of at least twelve consecutive months and fails to return
      to the performance of services within 30 days after receipt of a written demand
      by the Company to do so.


(b)  The
      term
“Cause” shall mean the willful engaging by the Executive in illegal conduct or
      gross misconduct which is demonstrably and materially injurious to the Company.
      For purposes of this Agreement, no act, or failure to act, on the Executive’s
      part shall be deemed “willful” unless done, or omitted to be done, by the
      Executive not in good faith and without reasonable belief that the Executive’s
      action or omission was in the best interest of the Company. Notwithstanding
      the
      foregoing, the Executive shall not be deemed to have been terminated for Cause
      unless and until the Company delivers to the Executive a copy of a resolution
      duly adopted by the affirmative vote of not less than three-quarters of the
      entire membership of the Board at a meeting of the Board called and held for
      such purpose (after reasonable notice to the Executive and an opportunity for
      the Executive, together with counsel, to be heard before the Board) finding
      that, in the good faith opinion of the Board, the Executive was guilty of
      conduct set forth above and specifying the particulars thereof in
      detail.





(c)  The
      term
“Good Reason” shall mean the occurrence of any of the following circumstances
      without the Executive’s express written consent:





(i)
      a
      significant adverse change in the nature, scope or status of the Executive’s
      position, authorities or services from those in effect immediately prior to
      the
      Change in Control, including, without limitation, if the Executive was,
      immediately prior to the Change in Control, an executive officer of a public
      company, the Executive ceasing to be an executive officer of a public
      company;





(ii)
      the
      failure by the Company to pay the Executive any portion of the Executive’s
      current compensation, or to pay the Executive any portion of any installment
      of
      deferred compensation under any deferred compensation program of the Company,
      within seven days of the date such compensation is due;





(iii)
      a
      reduction in the Executive’s annual base compensation (or a material change in
      the frequency of payment) as in effect immediately prior to the Change in
      Control as the same may be increased from time to time;





(iv)  the
      failure by the Company to award the Executive an annual bonus in any year which
      is at least equal to the annual bonus awarded to the Executive for the year
      immediately preceding the year of the Change in Control;





(v)  the
      failure by the Company to award the Executive equity-based incentive
      compensation (such as stock options, shares of restricted stock, or other
      equity-based compensation) on a periodic basis consistent with the Company’s
      practices with respect to timing, value and terms prior to the Change in
      Control;


C-2




(vi)  the
      failure of the Company to award the Executive incentive compensation of any
      nature based on attained milestones when such milestones are attained.





(vii)  the
      failure of the Company to obtain a satisfactory agreement from any successor
      to
      the Company to assume and agree to perform this Agreement as contemplated by
      Section 14.





For
      purposes of any determination regarding the existence of Good Reason, any good
      faith determination by the Executive that Good Reason exists shall be
      conclusive.





3.  CHANGE
      IN CONTROL BENEFITS. In the event of a termination of engagement entitling
      the
      Executive to benefits in accordance with Section 2, the Executive shall receive
      the following:





(a)  The
      Executive shall be entitled to a lump sum payment in cash no later than twenty
      business days after the Executive’s date of termination equal to the sum
      of:





(i)  an
      amount
      equal to three times the Executive’s base salary in effect on the date of the
      Change in Control or, or if greater, as in effect immediately prior to the
      date
      of termination; plus





(ii)  an
      amount
      equal to three times the Executive’s bonus award for the year immediately
      preceding the year of the Change in Control.





The
      amount payable under this paragraph (d) shall be inclusive of the amounts,
      if
      any, to which the Executive would otherwise be entitled or by law and shall
      be
      in addition to (and not inclusive of) any amount payable under any written
      agreement(s) directly between the Executive and the Company or any of its
      subsidiaries.





(b)  The
      exercise price of all of the Company options owned by the Executive shall
      decrease to $0.01 per share.





(c)  The
      Company shall provide the Executive with outplacement services and tax and
      financial counseling suitable to the Executive’s position through the third
      anniversary of the date of the Executive’s termination of engagement, or, if
      earlier, the date on which the Executive becomes employed by another
      employer.





4.  MITIGATION.
      The Executive shall not be required to mitigate the amount of any payment
      provided for in this Agreement by seeking other engagement or otherwise. The
      Company shall not be entitled to set off against the amounts payable to the
      Executive under this Agreement any amounts owed to the Company by the Executive,
      any amounts earned by the Executive in other engagement after the Executive’s
      termination of engagement with the Company, or any amounts which might have
      been
      earned by the Executive in other engagement had the Executive sought such other
      engagement.


C-3


5.  MAKE-WHOLE
      PAYMENTS. If any payment or benefit to which the Executive (or any person on
      account of the Executive) is entitled, whether under this Agreement or
      otherwise, in connection with a Change in Control or the Executive’s termination
      of engagement (a “Payment”) constitutes a “parachute payment” within the meaning
      of section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
      and as a result thereof the Executive is subject to a tax under section 4999
      of
      the Code, or any successor thereto, (an “Excise Tax”), the Company shall pay to
      the Executive an additional amount (the “Make-Whole Amount”) which is intended
      to make the Executive whole for such Excise Tax. The Make-Whole Amount shall
      be
      equal to (i) the amount of the Excise Tax, plus (ii) the aggregate amount of
      any
      interest, penalties, fines or additions to any tax which are imposed in
      connection with the imposition of such Excise Tax, plus (iii) all income, excise
      and other applicable taxes imposed on the Executive under the laws of any
      Federal, state or local government or taxing authority by reason of the payments
      required under clauses (i) and (ii) and this clause (iii).





(a)  For
      purposes of determining the Make-Whole Amount, the Executive shall be deemed
      to
      be taxed at the highest marginal rate under all applicable local, state, federal
      and foreign income tax laws for the year in which the Make-Whole Amount is
      paid.
      The Make-Whole Amount payable with respect to an Excise Tax shall be paid by
      the
      Company coincident with the Payment with respect to which such Excise Tax
      relates.





(b)  All
      calculations under this Section 5 shall be made initially by the Company and
      the
      Company shall provide prompt written notice thereof to the Executive to enable
      the Executive to timely file all applicable tax returns. Upon request of the
      Executive, the Company shall provide the Executive with sufficient tax and
      compensation data to enable the Executive or the Executive’s tax advisor to
      independently make the calculations described in subparagraph (a) above and
      the
      Company shall reimburse the Executive for reasonable fees and expenses incurred
      for any such verification.





(c)  If
      the
      Executive gives written notice to the Company of any objection to the results
      of
      the Company’s calculations within 60 days of the Executive’s receipt of written
      notice thereof, the dispute shall be referred for determination to independent
      tax counsel selected by the Company and reasonably acceptable to the Executive
      (“Tax Counsel”). The Company shall pay all fees and expenses of such Tax
      Counsel. Pending such determination by Tax Counsel, the Company shall pay the
      Executive the Make-Whole Amount as determined by it in good faith. The Company
      shall pay the Executive any additional amount determined by Tax Counsel to
      be
      due under this Section 5 (together with interest thereon at a rate equal to
      120%
      of the Federal short-term rate determined under section 1274(d) of the Code)
      promptly after such determination.





(d)  The
      determination by Tax Counsel shall be conclusive and binding upon all parties
      unless the Internal Revenue Service, a court of competent jurisdiction, or
      such
      other duly empowered governmental body or agency (a “Tax Authority”) determines
      that the Executive owes a greater or lesser amount of Excise Tax with respect
      to
      any Payment than the amount determined by Tax Counsel.


C-4


(e)  If
      a
      Taxing Authority makes a claim against the Executive which, if successful,
      would
      require the Company to make a payment under this Section 5, the Executive agrees
      to contest the claim with counsel reasonably satisfactory to the Company, on
      request of the Company subject to the following conditions:





(i)
      The
      Executive shall notify the Company of any such claim within 10 days of becoming
      aware thereof. In the event that the Company desires the claim to be contested,
      it shall promptly (but in no event more than 30 days after the notice from
      the
      Executive or such shorter time as the Taxing Authority may specify for
      responding to such claim) request the Executive to contest the claim. The
      Executive shall not make any payment of any tax which is the subject of the
      claim before the Executive has given the notice or during the 30-day period
      thereafter unless the Executive receives written instructions from the Company
      to make such payment together with an advance of funds sufficient to make the
      requested payment plus any amounts payable under this Section 5 determined
      as if
      such advance were an Excise Tax, in which case the Executive will act promptly
      in accordance with such instructions.





(ii)
      If
      the Company so requests, the Executive will contest the claim by either paying
      the tax claimed and suing for a refund in the appropriate court or contesting
      the claim in the United States Tax Court or other appropriate court, as directed
      by the Company; PROVIDED, HOWEVER, that any request by the Company for the
      Executive to pay the tax shall be accompanied by an advance from the Company
      to
      the Executive of funds sufficient to make the requested payment plus any amounts
      payable under this Section 5 determined as if such advance were an Excise Tax.
      If directed by the Company in writing the Executive will take all action
      necessary to compromise or settle the claim, but in no event will the Executive
      compromise or settle the claim or cease to contest the claim without the written
      consent of the Company; PROVIDED, HOWEVER, that the Executive may take any
      such
      action if the Executive waives in writing the Executive’s right to a payment
      under this Section 5 for any amounts payable in connection with such claim.
      The
      Executive agrees to cooperate in good faith with the Company in contesting
      the
      claim and to comply with any reasonable request from the Company concerning
      the
      contest of the claim, including the pursuit of administrative remedies, the
      appropriate forum for any judicial proceedings, and the legal basis for
      contesting the claim. Upon request of the Company, the Executive shall take
      appropriate appeals of any judgment or decision that would require the Company
      make a payment under this Section 5. Provided that Executive is in compliance
      with the provisions this section, the Company shall be liable for and indemnify
      the Executive against any loss in connection with, and all costs and expenses,
      including attorneys’ fees, which may be incurred as a result of, contesting the
      claim, and shall provide to the Executive within 30 days after each written
      request therefor by the Executive cash advances or reimbursement for all such
      costs and expenses actually incurred or reasonably expected to be incurred
      by
      the Executive as a result of contesting the claim.




(f)  Should
      a
      Tax Authority finally determine that an additional Excise Tax is owed, then
      the
      Company shall pay an additional Make-Whole Amount to the Executive in a manner
      consistent with this Section 5 with respect to any additional Excise Tax and
      any
      assessed interest, fines, or penalties. If any Excise Tax as calculated by
      the
      Company or Tax Counsel, as the case may be, is finally determined by a Tax
      Authority to exceed the amount required to be paid under


C-5


applicable
      law, then the Executive shall repay such excess to the Company within 30 days
      of
      such determination; provided that such repayment shall be reduced by the amount
      of any taxes paid by the Executive on such excess which is not offset by the
      tax
      benefit attributable to the repayment.





6.  TERMINATION
      DURING POTENTIAL CHANGE IN CONTROL. If a Potential Change in Control (as defined
      in Section 8) occurs during the Agreement Term, and the Company terminates
      the
      Executive’s engagement for reasons other than Permanent Disability or Cause
      during such Potential Change in Control, the Executive shall be entitled to
      receive the benefits that the Executive would have received under Section 3,
      such benefits to be calculated based upon the Executive’s compensation prior to
      the actual termination of engagement but paid within 20 business days of the
      date of such termination.





7.  CHANGE
      IN
      CONTROL. For purposes of this Agreement, a “Change in Control” shall be deemed
      to have occurred on the earliest of the following dates:





(a)  the
      date
      any Person is or becomes the Beneficial Owner, directly or indirectly, of
      securities of the Company representing 30% or more of the combined voting power
      of the Company’s then outstanding securities, excluding any Person who becomes
      such a Beneficial Owner in connection with a transaction described in clause
      (i)
      of paragraph (c) below; or





(b)  the
      date
      on which the following individuals cease for any reason to constitute a majority
      of the number of directors then serving: individuals who, on the date hereof,
      constitute the Board and any new director (other than a director whose initial
      assumption of office is in connection with an actual or threatened election
      contest, including but not limited to a consent solicitation, relating to the
      election of directors of the Company) whose appointment or election by the
      Board
      or nomination for election by the Company’s stockholders was approved or
      recommended by a vote of at least two-thirds (2/3) of the directors then still
      in office who either were directors on the date hereof or whose appointment,
      election or nomination for election was previously so approved or recommended;
      or





(c)  the
      date
      on which there is consummated a merger or consolidation of the Company or any
      direct or indirect subsidiary of the Company with any other corporation or
      other
      entity, other than (i) a merger or consolidation (A) immediately following
      which
      the individuals who comprise the Board immediately prior thereto constitute
      at
      least a majority of the board of directors of the Company, the entity surviving
      such merger or consolidation or, if the Company or the entity surviving such
      merger or consolidation is then a subsidiary, the ultimate parent thereof and
      (B) which results in the voting securities of the Company outstanding
      immediately prior to such merger or consolidation continuing to represent
      (either by remaining outstanding or by being converted into voting securities
      of
      the surviving entity or any parent thereof), in combination with the ownership
      of any trustee or other fiduciary holding securities under an employee benefit
      plan of the Company or any subsidiary of the Company, at least 50% of the
      combined voting power of the securities of the Company or such surviving entity
      or any parent thereof outstanding immediately after such merger or
      consolidation, or (ii) a merger or consolidation effected to implement a
      recapitalization of the Company (or similar transaction) in which no Person
      is
      or becomes the Beneficial Owner, directly or indirectly, of securities of
      the


C-6


Company
      representing 30% or more of the combined voting power of the Company’s then
      outstanding securities; or





(d)  the
      date
      on which the stockholders of the Company approve a plan of complete liquidation
      or dissolution of the Company or there is consummated an agreement for the
      sale
      or disposition by the Company of all or substantially all of the Company’s
      assets, other than a sale or disposition by the Company of all or substantially
      all of the Company’s assets to an entity, at least 50% of the combined voting
      power of the voting securities of which are owned by stockholders of the
      Company, in combination with the ownership of any trustee or other fiduciary
      holding securities under an employee benefit plan of the Company or any
      subsidiary of the Company, in substantially the same proportions as their
      ownership of the Company immediately prior to such sale.





Notwithstanding
      the foregoing, a “Change in Control” shall not be deemed to have occurred by
      virtue of the consummation of any transaction or series of integrated
      transactions immediately following which the record holders of the common stock
      of the Company immediately prior to such transaction or series of transactions
      continue to have substantially the same proportionate ownership in an entity
      which owns all or substantially all of the assets of the Company immediately
      following such transaction or series of transactions.





For
      purposes of this Agreement: “Affiliate” shall have the meaning set forth in Rule
      12b-2 promulgated under Section 12 of the Exchange Act; “Beneficial Owner” shall
      have the meaning set forth in Rule 13d-3 under the Exchange Act; “Exchange Act”
shall mean the Securities Exchange Act of 1934, as amended from time to time;
      and “Person” shall have the meaning given in Section 3(a)(9) of the Exchange
      Act, as modified and used in Sections 13(d) and 14(d) thereof, except that
      such
      term shall not include (i) the Company or any of its subsidiaries, (ii) a
      trustee or other fiduciary holding securities under an employee benefit plan
      of
      the Company or any of its Affiliates, (iii) an underwriter temporarily holding
      securities pursuant to an offering of such securities, or (iv) a corporation
      owned, directly or indirectly, by the stockholders of the Company in
      substantially the same proportions as their ownership of stock of the
      Company.





8.  POTENTIAL
      CHANGE IN CONTROL. A “Potential Change in Control” shall exist during any period
      in which the circumstances described in paragraphs (a), (b), (c) or (d), below,
      exist (provided, however, that a Potential Change in Control shall cease to
      exist not later than the occurrence of a Change in Control):





(a)  The
      Company enters into an agreement, the consummation of which would result in
      the
      occurrence of a Change in Control, provided that a Potential Change in Control
      described in this paragraph (a) shall cease to exist upon the expiration or
      other termination of all such agreements;





(b)  Any
      Person (without regard to the exclusions set forth in subsections (i) through
      (iv) of such definition) publicly announces an intention to take or to consider
      taking actions the consummation of which would constitute a Change in Control;
      provided that a Potential Change in Control described in this paragraph (b)
      shall cease to exist upon the withdrawal of such


C-7


intention,
      or upon a determination by the Board that there is no reasonable chance that
      such actions would be consummated;





(c)  Any
      Person becomes the Beneficial Owner, directly or indirectly, of securities
      of
      the Company representing 20% or more of either the then outstanding shares
      of
      common stock of the Company or the combined voting power of the Company’s then
      outstanding securities;





(d)  The
      Board
      adopts a resolution to the effect that, for purposes of this Agreement, a
      Potential Change in Control exists; provided that a Potential Change in Control
      described in this paragraph (d) shall cease to exist upon a determination by
      the
      Board that the reasons that gave rise to the resolution providing for the
      existence of a Potential Change in Control have expired or no longer exist.





9.  NONALIENATION.
      The interests of the Executive under this Agreement are not subject in any
      manner to anticipation, alienation, sale, transfer, assignment, pledge,
      encumbrance, attachment, or garnishment by creditors of the Executive or the
      Executive’s beneficiary.





10.  AMENDMENT.
      This Agreement may be amended or canceled only by mutual agreement of the
      parties in writing without the consent of any other person. So long as the
      Executive lives, no person, other than the parties hereto, shall have any rights
      under or interest in this Agreement or the subject matter hereof.





11.  APPLICABLE
      LAW. The provisions of this Agreement shall be construed in accordance with
      the
      laws of the State of New York, without regard to the conflict of law provisions
      of any state.




12.  SEVERABILITY.
      The invalidity or unenforceability of any provision of this Agreement will
      not
      affect the validity or enforceability of any other provision of this Agreement,
      and this Agreement will be construed as if such invalid or unenforceable
      provision were omitted (but only to the extent that such provision cannot be
      appropriately reformed or modified).





13.  WAIVER
      OF
      BREACH. No waiver by any party hereto of a breach of any provision of this
      Agreement by any other party, or of compliance with any condition or provision
      of this Agreement to be performed by such other party, will operate or be
      construed as a waiver of any subsequent breach by such other party of any
      similar or dissimilar provisions and conditions at the same or any prior or
      subsequent time. The failure of any party hereto to take any action by reason
      of
      such breach will not deprive such party of the right to take action at any
      time
      while such breach continues.





14.  SUCCESSORS,
      ASSUMPTION OF CONTRACT. This Agreement shall be binding upon and inure to the
      benefit of the Company and any successor of the Company. The Company will
      require any successor (whether direct or indirect, by purchase, merger,
      consolidation or otherwise) to all or substantially all of the business and/or
      assets of the Company to expressly assume and agree to perform this Agreement
      in
      the same manner and to


C-8


the
      same
      extent that the Company would be required to perform it if no succession had
      taken place. This Agreement is personal to the Executive and may not be assigned
      by the Executive without the written consent of the Company. However, to the
      extent that rights or benefits under this Agreement otherwise survive the
      Executive’s death, the Executive’s heirs and estate shall succeed to such rights
      and benefits pursuant to the Executive’s will or the laws of descent and
      distribution; provided that the Executive shall have the right at any time
      and
      from time to time, by notice delivered to the Company, to designate or to change
      the beneficiary or beneficiaries with respect to such benefits.





15.  NOTICES.
      Notices and all other communications provided for in this Agreement shall be
      in
      writing and shall be delivered personally or sent by registered or certified
      mail, return receipt requested, postage prepaid (provided that international
      mail shall be sent via overnight or two-day delivery), or sent by facsimile
      or
      prepaid overnight courier to the parties at the addresses set forth below.
      Such
      notices, demands, claims and other communications shall be deemed
      given:





(a)  in
      the
      case of delivery by overnight service with guaranteed next day delivery, the
      next day or the day designated for delivery;





(b)  in
      the
      case of certified or registered U.S. mail, five days after deposit in the U.S.
      mail; or





(c)  in
      the
      case of facsimile, the date upon which the transmitting party received
      confirmation of receipt by facsimile, telephone or otherwise;





provided,
      however, that in no event shall any such communications be deemed to be given
      later than the date they are actually received. Communications that are to
      be
      delivered by the U.S. mail or by overnight service or two-day delivery service
      are to be delivered to the addresses set forth below:





to
      the
      Company:





Capital
      Gold Corporation


76
      Beaver
      Street


26th
      Floor


New
      York,
      NY 10005





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with
      a
      copy (which shall not constitute notice) to:




Chief
      Financial Officer


Capital
      Gold Corporation


76
      Beaver
      Street


26th
      Floor


New
      York,
      NY 10005





or
      to the
      Executive:





Roger
      A.
      Newell


1781
      S.
      Larkspur Drive


Golden,
      CO 80401





Each
      party, by written notice furnished to the other party, may modify the applicable
      delivery address, except that notice of change of address shall be effective
      only upon receipt.





16.  LEGAL
      AND
      ENFORCEMENT COSTS. The provisions of this Section 16 shall apply if it becomes
      necessary or desirable for the Executive to retain legal counsel or incur other
      costs and expenses in connection with enforcing any and all rights under this
      Agreement or any other compensation plan maintained by the Company;





(a)  The
      Executive shall be entitled to recover from the Company reasonable attorneys’
fees, costs and expenses incurred in connection with such enforcement or
      defense.





(b)  Payments
      required under this Section 16 shall be made by the Company to the Executive
      (or
      directly to the Executive’s attorney) promptly following submission to the
      Company of appropriate documentation evidencing the incurrence of such
      attorneys’ fees, costs, and expenses.





(c)  The
      Executive shall be entitled to select legal counsel; provided, however, that
      such right of selection shall not affect the requirement that any costs and
      expenses reimbursable under this Section 16 be reasonable.





(d)  The
      Executive’s rights to payments under this Section 16 shall not be affected by
      the final outcome of any dispute with the Company.





17.  SURVIVAL
      OF AGREEMENT. Except as otherwise expressly provided in this Agreement, the
      rights and obligations of the parties to this Agreement shall survive the
      termination of the Executive’s engagement with the Company.





18.  ENTIRE
      AGREEMENT. Except as otherwise provided herein, this Agreement constitutes
      the
      entire agreement between the parties concerning the subject matter hereof and
      supersedes all prior or contemporaneous agreements, between the parties relating
      to the subject matter hereof; provided, however, that nothing in this Agreement
      shall be construed to limit any policy or agreement that is otherwise applicable
      relating to confidentiality, rights to inventions,


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copyrightable
      material, business and/or technical information, trade secrets, solicitation
      of
      employees, interference with relationships with other businesses, competition,
      and other similar policies or agreement for the protection of the business
      and
      operations of the Company and the subsidiaries.





19.  COUNTERPARTS.
      This Agreement may be executed in two or more counterparts, any one of which
      shall be deemed the original without reference to the others.





IN
      WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has
      caused these presents to be executed in its name and on its behalf, and its
      corporate seal to be hereunto affixed on this 31 st day of
      July, 2006, all as of the Effective Date.





s/Roger
      A. Newell


Roger
      A.
      Newell





CAPITAL
      GOLD CORPORATION





By: s/
      Gifford A. Dieterle


Gifford
      A. Dieterle, President








ATTEST:





s/
      Christopher Chipman


Christopher
      Chipman, CFO




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